Last week saw the newest second-quarter earnings release from Singapore Exchange Limited (SGX:S68), an important milestone in the company's journey to build a stronger business. Singapore Exchange reported in line with analyst predictions, delivering revenues of S$231m and statutory earnings per share of S$0.092, suggesting the business is executing well and in line with its plan. This is an important time for investors, as they can track a company's performance in its report, look at what top analysts are forecasting for next year, and see if there has been any change to expectations for the business. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
Taking into account the latest results, Singapore Exchange's 13 analysts currently expect revenues in 2020 to be S$963.6m, approximately in line with the last 12 months. Statutory per share are forecast to be S$0.39, approximately in line with the last 12 months. Before this earnings report, analysts had been forecasting revenues of S$959.9m and earnings per share (EPS) of S$0.39 in 2020. So it's pretty clear that, although analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.
Analysts reconfirmed their price target of S$8.42, showing that the business is executing well and in line with expectations. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. The most optimistic Singapore Exchange analyst has a price target of S$9.60 per share, while the most pessimistic values it at S$7.28. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or that analysts have a clear view on its prospects.
It can also be useful to step back and take a broader view of how analyst forecasts compare to Singapore Exchange's performance in recent years. We would highlight that Singapore Exchange's revenue growth is expected to slow, with forecast 0.9% increase next year well below the historical 4.0%p.a. growth over the last five years. By way of comparison, other companies in this market with analyst coverage, are forecast to grow their revenue at 8.7% per year. So it's pretty clear that, while revenue growth is expected to slow down, analysts still expect the wider market to grow faster than Singapore Exchange.
The Bottom Line
The most obvious conclusion from these results is that there's been no major change in the business' prospects in recent times, with analysts holding earnings per share steady, in line with previous estimates. On the plus side, there were no major changes to revenue estimates; although analyst forecasts imply revenues will perform worse than the wider market. The consensus price target held steady at S$8.42, with the latest estimates not enough to have an impact on analysts' estimated valuations.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for Singapore Exchange going out to 2022, and you can see them free on our platform here..
We also provide an overview of the Singapore Exchange Board and CEO remuneration and length of tenure at the company, and whether insiders have been buying the stock, here.
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